Morton v. Yonkers (In the Matter of Vallecito Gas, LLC)

Summarized by Craig Geno , Law Offices of Craig M Geno, PLLC
11 years 3 months ago

Citation:

Harvey Morton, Trustee v. Yonkers, et. al; No. 13-10926

Tag(s):

Ruling:

Chapter 11 trustee could not void overriding royalty interests in a gas lease on lands belonging to the Navajo Nation based solely on the fact that the Navajo Nation had not approved the transfers of overriding royalty interests. The trustee was not the party protected by the applicable provisions of the Navajo Code and thus could not invoke them. The Navajo Code provision at issue was designed to protect the Navajo Nation from exploitation. Finally, the Court ruled that only parties to a contract, as a general rule, can raise an assertion of illegality.

Procedural context:

Appeal from the United States District Court, N. D. Texas which had affirmed a decision of the United States Bankruptcy Court for the N. D. Texas in favor of the Appellees.

Facts:

Vallecito purchased a gas lease located on land of the Navajo Nation. Vallecito later made various assignments of the lease. Litigation ensued arising out of certain of the assignments and the litigation was settled. Vallecito then recorded an assignment of the lease. Appellees purchased the overriding royalty interests but no approval of this purchase was sought from the Navajo Nation, as required by the Navajo Code. Vallecito filed Chapter 11 and the Appellant was appointed as the Chapter 11 trustee. The trustee filed an adversary proceeding against the Appellees seeking to void the overriding royalty interests they had purchased.

Judge(s):

Jolly, Jones and Africk

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